The future of Microsoft's Windows Phone division has been under attack recently due to cutbacks and continued reorganization. However, all is not terrible as sales of Lumias are still inching up in sales.
In Microsoft's FY15 report for Quarter 4, they are saying 8.4 million Lumias as being sold "growing more than 10% over prior year full quarter sales". Although that doesn't sound terrible, it also noted that overall revenue is down due to only low-end Lumias being sold. This decline should not come as a surprise though as Microsoft has not released a full-fledged flagship Windows Phone yet, leaving only small margins for profit in current Lumia sales.
Other highlights from the report include:
- Phone Hardware revenue decreased $748 million or 38%. Gross margin decreased $158 million, due to lower revenue, offset in part by a $590 million or 31% decrease in cost of revenue. Phone Hardware has been included in our consolidated financial results starting on April 25, 2014, the date we acquired NDS.
- Lumia phones revenue declined, driven by a mix shift to lower price point devices. We sold 8.4 million Lumia phones in the fourth quarter compared to 5.8 million in the prior year.
- Non-Lumia phones revenue declined, driven primarily by lower volumes. We sold 19.4 million non-Lumia feature phones in the fourth quarter compared to 30.3 million in the prior year.
- Phone Hardware revenue included an unfavorable foreign currency impact of approximately 4%.
As usual, this is a mixed bag of news. On the one hand, Microsoft is selling more Lumias than ever, which is still amazing considering what they are up against and in managing the acquisition and integration of the Nokia mobile devices division into the company. However, it is also clear that Microsoft needs some high-end flagship phones to spark more interesting in their mobile OS and get that revenue back.
Of course, it could have been disastrous if Microsoft had announced sales and revenues were down. In that sense, the company's struggles in mobile will continue but with some definite momentum.
Microsoft is expected to announce two new Lumia flagship phones with Windows 10 in September during the IFA conference in Berlin. General availability will likely begin in October, kicking off what many hope is a Windows 10 Mobile resurgence.
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